Post-Disaster Organisational Recovery in a Central Business District Context:

Transcription

1 Resilient Organisations Research Report 2011/03 Post-Disaster Organisational Recovery in a Central Business District Context: The 2010 & 2011 Canterbury Earthquakes Joanne R. Stevenson Erica Seville Hlekiwe Kachali John Vargo Zachary Whitman Resilient Organisations Programme :: New Zealand ::

2 ABOUT THE RESILIENT ORGANISATIONS RESEARCH PROGRAMME Building more resilient organisations, able to survive and thrive in a world of uncertainty, through research and practice We live in an increasingly complex world dealing with a broad spectrum of crises arising from both natural and man-made causes. Resilient organisations are those that are able to survive and thrive in this world of uncertainty. Resilience integrates the concepts of Risk, Crisis Management, Business Continuity Planning and Organisational Leadership to provide a platform for developing more robust and agile organisations. Who we are: The Resilient Organisations Research Group (ResOrgs) is a multi-disciplinary team of 17 researchers and practitioners that is New Zealand based and with global reach. A collaboration between top New Zealand research Universities and key industry players, including the University of Canterbury and the University of Auckland, ResOrgs is funded by the Ministry for Science and Innovation through the Natural Hazards Research Platform and supported by a diverse group of industry partners and advisors. The research group represents a synthesis of engineering disciplines and business leadership aimed at transforming NZ organisations into those that both survive major events and thrive in the aftermath. We are committed to making New Zealand organisations more resilient in the face of major hazards in the natural, built and economic environments. Resilient organisations are able to rebound from disaster and find opportunity in times of distress. They are better employers, contribute to community resilience and foster a culture of self reliance and effective collaboration. What we do: The ResOrgs programme of public good research is aimed at effective capability building through research activities with significant impacts on policy and practice. Activities and outputs of the group, in existence since 2004, include informing and focusing debate in areas such as Civil Defence Emergency Management, post-disaster recovery, and the resilience of critical infrastructure sectors, in addition to core activities in relation to organisation resilience capability building and benchmarking. We have produced practical frameworks and guides and helped organisations to develop and implement practical resilience strategies suitable to their environment. Why we do it: In an increasingly volatile and uncertain world, one of the greatest assets an organisation can have is the agility to survive unexpected crisis and to find opportunity to thrive in the face of potentially terminal events. We believe such resilience makes the most of the human capital that characterises the modern organisation and offers one of the greatest prospects for differentiating the successful organisation on the world stage. This resilience is typified by 20/20 situation awareness, effective vulnerability management, agile adaptive capacity and world class organisational culture and leadership. More resilient organisations lead to more resilient communities and provide the honed human capital to address some of our most intractable societal challenges. For more information see our website: 2

3 EXECUTIVE SUMMARY This report presents the findings from two studies on organisational resilience following the 4 September 2010 earthquake in Canterbury, New Zealand to answer three core research questions related to the recovery of organisations within the context of a Central Business District: How did the damage to and decisions of organisations and their neighbours within a Central Business District influence the recovery of an individual business? To what extent did pre-event characteristics of the CBD, and pre-existing plans for how the CBD would evolve into the future, influence the individual organisations resilience and the recovery process within the CBD as a whole? How do policies and plans implemented to manage recovery at the CBD level influence individual organisations recovery? The first study surveyed organisations from across Canterbury in the aftermath of the 4 September earthquake, collecting data from 366 organisations about initial impacts, disruptions, and challenges faced by organisations, as well as information about organisational attributes, relationships and strategies that may have helped mitigate the impacts of the earthquake. A cross-section of geographic areas and industry sectors were strategically selected to take part in this survey to reflect various elements of the Canterbury economy. The results from this survey showed that organisations located in the Christchurch and Kaiapoi CBDs were more likely to close for a period of time following the disaster and stay closed for more days than organisations in other sectors. CBD organisations were also more likely to be disrupted by structural damage and more likely to relocate all or part of their organisations than most other sectors. Similarly, organisations in the two CBDs were more likely to experience revenue decreases following disasters. These findings suggest that CBD organisations face a different set of risks and may require additional support during the response and recovery phase and better mitigation and planning prior to an event. For example, CBD organisations had more issues with site access following a disaster, therefore they should emphasize backing up critical information in multiple locations and where possible plan for and facilitate staff relocation or the ability to work from home. The second study focused particularly on the progress of recovery for the Kaiapoi CBD since the earthquake. Although Kaiapoi suffered significantly from the 4 September earthquake, it did not experience a large amount of additional damage as a result of the 22 February 2011 earthquake. As a result, Kaiapoi is an interesting example of a recovering community in a unique position to revitalise and develop economic and organisational capacity. While recovery progress is difficult to quantify precisely, at the time of writing Kaiapoi was clearly further along in the recovery process than Christchurch. As such, Kaiapoi can potentially provide useful lessons to guide the recovery of Christchurch and other disaster-affected areas. This study used semi-structured interviews with twelve key informants identified as having a significant influence in shaping the post-disaster environment for Kaiapoi businesses. The data from these interviews provided information about the local context for organisational recovery. Understanding the local context around organisational recovery helps to clarify the decisions and 3

4 justifications that shape plans, regulations, and social, economic factors that ultimately influence how organisations recover. Four key themes emerged during these interviews as having a significantly influence on the recovery environment within the Kaiapoi CBD, these were: Competition and collaboration Leadership, engagement and communication Drivers and temporal influences on recovery Preparing for reconstruction. Recognising and maximising opportunities in crisis is one of the central tenets of resilience. The Canterbury earthquakes have presented organisations in Kaiapoi and throughout Canterbury with an opportunity to reinvent themselves, capture new markets, and form new partnerships. Much of the dialogue in the interviews depicted a departure from survival-of-the-fittest business models to one that emphasised collaboration and mutual benefit. Within a CBD environment, organisations can work together forming economic clusters for copromotion and support or to share resources in order to decrease the impacts and improve business post-disaster. Thus, while organisations are at risk from other organisations in close proximity and the impacts of restricted access following a disaster, they can reduce risk by forming partnerships and networks with other organisations. An important area for further research is to investigate the nature of collaborative relationships and how they are being formed prior to and following disasters. Understanding the way organisational networks are utilised during disaster recovery, can also help identify ways these collaborations can be fostered and managed as part of mitigation and response activities. Recovery is a complex process with many interested and interacting parties; it is therefore difficult to interpret who the leaders of recovery are at any point in time. There was a general acknowledgement that for recovery to be successful decisions needed to be made by working together and maintaining constant communication between government, non-government organisations (for-profit and not-for-profit), and the community. It is clear from the interviews that the Waimakariri District Council (WDC) has emerged as an influential, widely acknowledged entity in the recovery. The WDC has made efforts to engage residents and businesses in planning and decision making processes, although there were conflicting reports on the level and success of engagement with businesses. Urban plans developed prior to the disaster are definitely playing a part in the way Kaiapoi redevelopment is being pursued, both positively and negatively. Plans had been developed and community consultation done prior to the earthquakes, planners had a head start in the aftermath of the disaster. The disaster acted as a catalyst for plans that had been made but were sitting on the shelf because of a lack of political and economic will. However, the pre-established plans can also be viewed as a hindrance because organisations may view the consulting process post-disaster a matter of getting buy-in to something they may or may not have had previous input on. Whilst some reported that engagement has been so extensive that community members were feeling fatigued with the process and WDC should just finalise plans and begin recovery work, others indicated that businesses were frustrated with both the engagement process and the plan put forth by the Council. 4

5 In response a business advocate group was formed to develop an alternative plan for the town centre (which was eventually adopted by the WDC). Important questions that surfaced during the analysis of these interviews were: What is the most appropriate model for business engagement in planning and recovery decision making? and; Should councils and Government move away from a public meeting type format towards creating collaborative partnerships with businesses and developers. Effects of disasters differ depending on the different phases of the recovery cycle. Goods and services demanded in the response phase might not be the same (in type and quality) as those demanded in the recovery phase. Consequently, some organisations might do well immediately after, leading to a sense that they have recovered, only to experience delayed effects or the influence of a changed market months following the initial disruption. External factors that individual organisations cannot control including insurance payouts, ongoing aftershocks, and policy changes can make future planning and decision making post-earthquake particularly problematic. Acknowledging these difficulties several respondents argued that having timeframes and a recovery program with defined goals were essential to the recovery process. Realistic timeframes and setting goals as part of a recovery programme allow people to plan, make needed arrangements, and keep the recovery process moving forward. Significant concern was also expressed about the potential impacts of the reconstruction process on Kaiapoi organisations. If we can understand more about the way reconstruction efforts influence organisations, organisations may be able to adapt their behaviours to maximise the benefits of the environmental changes. For example, reconstruction efforts will necessarily bring many construction workers who need temporary accommodation, services, food and entertainment. How can organisations plan to adapt their marketing or product to this new demographic? This concept of planning for the anticipated impacts of reconstruction ties in with several other themes emerging from the interviews. For example, many respondents discussed the importance of having a recovery programme that gives an indication of timelines. With approximate timelines, organisations can plan for when they will need to relocate or consider what they might do to minimise noise and vibration disruptions caused by heavy machinery. Similarly, organisations may be able to develop collaborative relationships with competitors, co-located organisations, or those providing complementary services to aid each other during the reconstruction period. With the massive demolition and reconstruction process that will occur in Canterbury over at least the next decade, understanding how reconstruction may affect organisations or disrupt their operations will inform planning and business support decisions. Additionally, investigating and developing ways organisations can find opportunities in the reconstruction period will help Canterbury organisations recover more successfully. The two studies discussed in this report are part of a broader longitudinal study of the resilience and recovery of organisations following the 2010 and 2011 Canterbury earthquakes. A second survey is currently underway to assess organisational impacts, planning, and mitigation information following the 22 February earthquake. More in-depth research into the challenges and opportunities emerging for different sectors is also in process. As they become available, additional research results will be released onto our website: 5

6 ACKNOWLEDGEMENTS Our thanks go to the Ministry of Civil Defence and Emergency Management, New Zealand who funded this particular research project, particularly Ljubica Mamula-Seadon who was essential to its development, actively contributing to and supporting the progression of the research. We also thank the Karen Remetis of the Town Centre Development Group, Paul Lonsdale of the Central City Business Association, Heather Warwick of Enterprise North Canterbury and Simon Markham of Waimakariri District Council for providing additional data and support for the project. We would also like to thank the many individuals and organisations who took part in this research, giving us their time and insights during a very stressful period. For confidentiality reasons we cannot name them individually, but without these individuals and organisations this study would have been impossible. We appreciate and acknowledge the invaluable knowledge and input from our colleagues at the University of Canterbury, Dr. Thomas Wilson and Dr. David Conradson. Finally, we d like to thank the Ministry of Science and Innovation who fund the Resilient Organisations research programme through the Natural Hazards Research Platform. 6

7 TABLE OF CONTENTS About the Resilient Organisations Research Programme... 2 Executive Summary... 3 Acknowledgements Research Context Environmental Context in Organisational Recovery Research Objectives Events and Study Area Organisational Impacts & Recovery Progress (Study 1) Questionnaire Sample & Methodology Sectoral Results Demographic data Physical impacts of the earthquake Impacts on revenue & redundancies Organisational preparedness, recovery finance, & mitigation Contextual Overview of CBD Recovery in Kaiapoi (Study 2) Interview Sample & Methodology Discussion of Major Themes from the Interviews Competition & collaboration Leadership, engagement & communication Drivers & temporal influences on recovery Preparing for reconstruction Conclusions - Research Questions Revisited Future Work References Appendix A: Semi-structured Interview Guide

8 LIST OF TABLES Table 1: Location of industry sectors within the geographic CBD boundaries Table 2: Organisation type breakdown of the CBD samples Table 3: Basic organisational demographics Table 4: Closed and affected organisations Table 5: Reasons for closure Table 6: Average organisational disruption scores broken down by item and sector Table 7: Organisations relocating all or part of their business Table 8: Organisational revenue change after 4 September Table 9: Estimated revenue change by sector Table 10: Employee hiring and firing Table 11: Summary of each sector's biggest challenges in the aftermath of the 4 September earthquake Table 12: Percentage of organisations with the different insurance types Table 13: Degree of satisfaction with insurer, insurance package and banker Table 14: Recovery finance options Table 15: Sectoral results of the mitigation factor scores per item LIST OF FIGURES Figure 1: Survey response rate, by sector Figure 2: Location of sampled organisations in relation to MMI intensities [26] Figure 3: Forecast of end of change in revenue Figure 4: Number of times the entity was referred to during the interviews

9 1. RESEARCH CONTEXT This report presents results from two studies conducted by Resilient Organisations and the University of Canterbury on organisational 1 recovery following the following the 4 September 2010 earthquake in Canterbury, New Zealand. This report focuses on organisational recovery within the context of a Central Business District and particularly on the recovery of organisations within two Central Business Districts (CBDs), Christchurch and Kaiapoi. Christchurch is Canterbury s largest city and economic centre, and Kaiapoi is a smaller town 20km north of Christchurch which was heavily impacted by liquefaction and lateral spreading following the 4 September earthquake. This research aims to develop a more complex understanding of business recovery in CBDs, which recognises the linkages among organisations and their social, economic and physical environments. Studies examining organisational recovery and resilience often focus on organisations as isolated units. However, this fails to recognize the interconnections between organisations and their spatial context [1]. A CBD is more than a collection of buildings and organisations; it is characterised by physical, social, political and economic networks that are constantly evolving and influence recovery from disasters. The extended cordoning of the Christchurch CBD and the need to close nearby organisations during building demolitions in the weeks following both the 4 September 2010 and 22 February 2011 earthquakes highlights some of the unique challenges faced by organisations located within central business districts. Alesch et al. [2] argue that a return to the status quo ex ante or the exact same conditions as before the disaster event is impossible. A more accurate depiction of recovery from a systems perspective means a reestablishment of a dynamic homeostasis approximating conditions and relationships (p. 14) that existed prior to the disaster. Organisational recovery literature recognises that readjustment to a new and different post-disaster environment is necessary for organisational recovery to succeed. In situations where the economic conditions have changed, a decreased level of profitability could be the new norm that a recovered business adjusts to [1, 3, 4]. The United Nations International Strategy for Disaster Reduction (UNISDR) definition of recovery incorporates the concept of improvement as an essential part of the process: Recovery is, The restoration and improvement where appropriate, of facilities, livelihoods, and living conditions of disaster-affected communities, including efforts to reduce disaster risk factors, [5, p.14]. For this research, we define organisational recovery as: the re-establishment and improvement where appropriate of an organisation s core functions, adjusted to the new post-disaster environment. This includes efforts to increase organisational resilience and reduce future risk. Resilience is a broad concept reflecting an organisation s ability to not only survive but to be able to thrive through times of adversity [6]. 1 In this study organisation refers to for-profit and not-for-profit including businesses, churches, educational and medical institutions of any size. Organisation and business will be used interchangeably. 9

10 1.1 Environmental Context in Organisational Recovery Factors that affect an organisation s recovery go beyond physical damage to structures, possessions, and infrastructure. Recovery research needs to account for the influence of the preand post-disaster social, economic, and networked context in which an organisation exists. In their discussion of socio-political ecology and disasters, Peacock and Ragsdale [7] argue that to understand disaster recovery, researchers must consider the policies and actions of public and private organisations and the processes of capital re-accumulation [8]. The recovery of businesses post-disaster is a critical driver of household recovery and vice versa. Households purchase and consume from businesses; businesses provide jobs, services, and recreation for households [9]. Since the late 1980s a number of studies have focused on the recovery of organisations following disasters, identifying what makes businesses vulnerable, how they are impacted and what challenges they face during recovery. Most of these studies focus on the disaster experiences of small business and a few have focused on disaster impacts and recovery differences between industry sectors. Kroll et al [10] found that following the Loma Prieta (California) earthquake in 1989, small businesses and particularly single location retail organisations, business services such as finance and real estate organisations, and service sector organisations experienced more difficulty recovering due to a lack of resources and lower customer numbers. Following the 2007 Gisborne (New Zealand) earthquake, Powell and Harding [11] found that a business s own poor managerial decisions (p.52), such as underinsuring the business or delaying strengthening the property to the current building code predicted business impacts. Pre-disaster business health and the disaster s impact on demand for an organisation s service (e.g. a cafe that relied on a few nearby offices that have relocated) were important predictors for business failure following the 1994 Northridge earthquake [12]. In a series of comparative studies tracking business recovery conducted by Tierney, Dahlhamer, and Webb following the 1992 Hurricane Andrew, 1993 U.S. Midwestern floods, and the 1989 and 1994 Loma Prieta and Northridge earthquakes, it was found that businesses which rented rather than owned their premises were more vulnerable to the negative impacts of disaster. They also found that organisations which had critical infrastructure (lifelines) interruptions (such as loss of electricity or water), and/or which reported supply chain disruptions were less likely to recover. Conversely, the length of business interruption and building damage were found not to be strong predictors of business recovery [13-16]. Several other studies have focused on sectoral, regional, and national economic modelling of disaster impacts and recovery [17, 18]. Okuyama [19] applied a combination of economic and engineering models to understand the inter-regional economic impacts of the Great Hanshin earthquake (Kobe, Japan 1994), demonstrating methods that can minimise system-wide supply constraints that slow recovery. Johnston et al. [20] reported major regional losses (approximately NZ$100 million) in the alpine tourism sector as a result closure of ski fields caused by the eruption of Mt. Ruapehu in the North Island of New Zealand. Considering an organisation s physical environment and surroundings is an important, but often neglected, aspect of the disaster recovery literature. Physical context includes the location of the business (e.g. in a CBD, a rural area, a small town) as well as the pre-existing trends and plans that have shaped the area s evolution prior to the disaster. For example, Chang and Nojima [21] showed that urban areas that experienced decentralisation before a disaster will often see acceleration of 10

11 this trend during recovery. Similarly, it has been found that locally oriented businesses, especially those in retail, which rely heavily on foot-traffic, tend to recover more slowly [1, 10, 12]. Also businesses that reopen in areas that had experienced higher levels of damage tend to recover slower or fail because customer populations may still be disrupted, the perception of shopping in a heavily damaged area is off-putting to customers, and there is less draw from nearby businesses [1]. Even if businesses have not experienced physical damage, critical service (lifeline) disruptions can have significant negative impacts on organisations [14, 22]. Dahlhamer [14] demonstrated that physically undamaged businesses experiences greater difficulty recovering if they are located in hard hit areas, while Tierney [23] discussed the destabilising impact on small-businesses of losing a nearby anchor business or business that acts as a draw to the area. 2. RESEARCH OBJECTIVES This study was designed to answer three core research questions. The first question asked: How did the damage to and decisions of organisations and their neighbours within a Central Business District influence the recovery of an individual business? Organisations within a CBD are closer to a larger number of organisations than in suburban and rural areas. Retail and hospitality organisations which congregate in CBDs are more reliant on foot traffic than other organisation types [24], and organisations within the CBD have often chosen their location due to its accessibility to customers. Following a disaster, organisations within a CBD are more vulnerable to neighbourhood effects. Even if an organisation s building is not damaged, neighbourhood effects, including damage to surrounding areas and the perception of an area being off-limits, have been shown to have a large influence on the level of impacts organisations experience post-disaster [1]. Other organisations also make decisions prior to and following disasters that affect other organisations within a CBD. For example, if a building owner chooses not to do building upgrades damage sustained as a result will often affect neighbours or if a nearby business chooses to relocate or not reopen it can cause a gap that negatively influences how the area is perceived. Research question one considers physical implications of proximity to other damaged buildings and the influence on organisational recovery. The second question considered: To what extent did pre-event characteristics of the CBD, and preexisting plans for how the CBD would evolve into the future, influence the individual organisations resilience and the recovery process within the CBD as a whole? This question zooms-out to examine CBD recovery from a more strategic viewpoint. Prior to the earthquakes, Christchurch and Canterbury outlined strategies for growth and development. One part of the strategy, for example, was to attract major businesses and skilled labour from overseas to aid the growth and development of the economy. Another part of the strategy was to develop retail, arts, events, and recreational activities to create more vibrant urban environments [25]. The strategies, conceptions, and visions for Canterbury s urban areas will influence the approach to recovery taken by decision makers and planners. The third question asked: How do policies and plans implemented to manage recovery at the CBD level influence individual organisations recovery? This question builds on the concepts in the previous research question, moving from pre-existing plans and strategies, to those implemented 11

12 post-disaster. This question aims to understand the relationship between strategic CBD-level actions, decisions and initiatives on individual organisational recovery. A quantitative questionnaire and qualitative interviews were used to capture the data for this report. In this report results from both the questionnaire and qualitative interviews are presented as separate studies, but in the discussion and conclusions these datasets are brought together to paint a broad picture that answers each research question. So far, Sections 1 and 2 of this report have provided the context and justification for this research, and explained the research questions and objectives. Section 3 provides a broad overview of the earthquake events and the study areas. Section 4 presents the structured questionnaire portion of the research providing information about how organisations were impacted by the 4 September, 2010 earthquake and highlighting differences between organisations in the CBD samples and organisations in other areas around Canterbury. Section 5 presents the major themes and concepts emerging from the qualitative analysis, providing contextual information about the recovery thus far of Kaiapoi CBD. Section 6 revisits and discusses each of the research questions in the context of the results shown. Finally, Section 7 outlines future work that is planned or required to advance the concepts presented here. 3. EVENTS AND STUDY AREA An M w 7.1 earthquake struck 40km west of Christchurch at 4:35am on September 4 th, 2010 at a depth of 10km. Prior to this event, Canterbury had experienced a period of relatively low seismic activity, with only three minor earthquakes in the previous 40 years [26]. Areas near the fault rupture experienced ground accelerations that were 1.26 times the acceleration due to gravity [26]. The September earthquake caused a large amount of shaking damage and serious but localised liquefaction damage. While the quake was damaging across large areas of Canterbury, there were no fatalities. Approximately six months following the 4 September earthquake, a separate fault ruptured in Canterbury, leading to a much different set of impacts. At 12:51pm on 22 February, Canterbury experienced an M w 6.3 earthquake centred approximately 10 km south-east of the Christchurch CBD [27]. Some areas of Christchurch experience ground accelerations that were more than 2.2 times the acceleration due to gravity [28]. The two CBDs that are the focal point of this study were impacted differently by the 4 September and 22 February earthquakes. Christchurch is New Zealand s second largest city, and the economic driver of the South Island. The Christchurch CBD suffered damage in both earthquakes, but damage was much more extensive from the February earthquake. During the September event about 26 per cent of buildings in the Christchurch CBD received either red-tags (unsafe for use) or yellow-tags (restricted access) as part of the initial structural assessment [25, 29]. Following the February earthquake, 57 per cent of buildings in the Christchurch CBD received red-tags or yellowtags [27]. For this study, the Christchurch CBD is defined as the area bound by the four avenues (Bealey Ave., Fitzgerald Ave., Deans Ave., and Moorehouse Ave). Kaiapoi is a small town of approximately 11,000 people located in the Waimakariri District of Canterbury. Kaiapoi was built on filled land over a historic channel of the Waimakariri River, and as 12

13 a result was one of the most extreme examples of liquefaction and lateral spread damage in Canterbury following the 4 September earthquake. A staggering 75 per cent of businesses in Kaiapoi were either red or yellow tagged and had either no or limited access to their premises following the September 4th earthquake [30]. Kaiapoi escaped with relatively little additional damage following the 22 February earthquake, aside from the worsening of pre-existing damage. Prior to the earthquake, Kaiapoi had experienced a number of economic challenges. The town had suffered a series of economic crises in the 1970s and 80s with the closure of the Freezing Works and Woollen Mills, two of the district s major employers. Before the 4 September 2010 earthquake, approximately per cent of Kaiapoi s working population commuted to Christchurch for work. Kaiapoi has struggled for years with losing retail and service trade to northern parts of Christchurch and the neighbouring town of Rangiora [30]. Kaiapoi was selected as the study area for the qualitative portion of this research primarily because, although it suffered significantly from the 4 September earthquake, it did not experience a large amount of additional damage as a result of the 22 February 2011 earthquake. As a result, Kaiapoi is an interesting example of a recovering community in a unique position to revitalise and recapture organisational benefits. In theory, Kaiapoi is approximately 6 months ahead of Christchurch in its recovery. While recovery progress is difficult to quantify precisely, at the time of writing Kaiapoi was clearly further along in the recovery process than Christchurch. As such, Kaiapoi can potentially provide useful lessons to guide the recovery of Christchurch and other disaster-affected areas. 4. ORGANISATIONAL IMPACTS & RECOVERY PROGRESS (STUDY 1) This section of the report presents an outline of the methods used to capture data from individual organisations affected by the 4 September earthquake. This data was collected using a questionnaire composed primarily of quantitative questions. The questionnaire was designed to collect data about initial impacts, disruptions, and challenges faced by organisations, as well as information about organisational attributes, relationships and strategies that may have helped mitigate the impacts of the earthquake. All information from the quantitative portion of this report was collected before the 22 February earthquake. Information is currently being collected on the impacts to and responses of organisations following the M w 6.3 February earthquake but is not included in this report. A nationwide moratorium on social earthquake research was in place between February and May 2011 to respect organisations and individuals needs to focus on response activities. The lessons learned and data gathered following the 4 September earthquake provide valuable understanding of how organisations in Canterbury prepare for, are impacted by, and respond to disasters. This will help to interpret and better manage the impacts of the February earthquake. 4.1 Questionnaire Sample & Methodology The distribution of the questionnaire was initiated November 17th, 2010 and data collection closed February 18 th, Questionnaires were mailed to organisations. This was followed by a telephone call where organisations were given the option of completing the survey by phone or in a personal 13

14 visit with a member of the research team, using an online survey tool or returning it by post or . The multi-media approach was designed to cater for those organisations that might have relocated, closed, or were too busy to complete the telephone survey during work hours. The final response rate was greatly improved by the flexible format approach to data collection. A cross-section of industry sectors was strategically selected for this study to reflect various elements of the Canterbury economy. The sample was divided into two portions. The geographically selected samples were selected based on both on their importance to the economy, but also on their spatial characteristics to exemplify the importance of environmental context on organisational recovery. More broadly, several industry sectors were selected based on various criteria that justified their importance to the Canterbury economy or relevance as indicators of recovery. Within each of these areas and sectors, organisations were randomly selected to be invited to take part in the study. The geographically selected samples included were: Christchurch CBD (CHCH CBD) represents an important retail and service hub in the Canterbury region. Both CBDs represent an aggregation of organisations in one locality, and allow analysis of challenges faced by organisations that are part of this spatial and economic unit. Kaiapoi CBD a smaller retail and service centre hub that was severely affected by liquefaction and lateral spread following the 4 September earthquake. Rural farm - organisations proximal to the fault trace in and around Darfield (Selwyn District) and also a high-growth sector part of Canterbury s regional economic plan Rural non-farm rural farm support organisations and were also selected on the basis of proximity to the fault trace. The industry sectors included were: Information and Communication Technology (ICT) a high-growth sector identified as a key component of Canterbury s regional economic plan Critical infrastructure (lifelines) for provision of services vital to recovery Hospitality (cafes, restaurants and bars) to analyse recovery through consumer discretionary spend Fast moving consumer goods (FMCG) including product producers, supermarkets, dairies, and petrol stations to analyse recovery through consumer non-discretionary spending Trucking important part of supply chain for many industry sectors and Building Suppliers for their involvement in the rebuilding process. As the Canterbury-based industry sectors were selected randomly, several of those organisations fell within the confines of the Christchurch CBD and two organisations from the industry sector samples fell within the Kaiapoi CBD. As seen in Table 1, 69 per cent of the hospitality sample was located in the Christchurch CBD. This aggregation is reflective of the actual distribution of hospitality including restaurants, bars, and cafes in the Canterbury region. Similarly, many of the critical infrastructure (lifeline) organisations had their main offices in the Christchurch CBD. About a quarter of ICT organisations were also located within the Christchurch CBD. 14

15 Table 1: Location of industry sectors within the geographic CBD boundaries Located Located in Sampling % in the % in the in the the Categories CHCH CBD Kaiapoi CBD CHCH CBD Kaiapoi CBD Building Supplies NOT located in a CBD % NOT in a CBD 3 10% 0 0% 27 90% FMCG 2 5% 1 2% 39 93% Hospitality 22 69% 0 0% 10 31% ICT 14 25% 0 0% 41 75% Critical Infrastructure 7 29% 0 0% 17 71% Rural Farm 0 0% 0 0% % Rural Town 0 0% 0 0% % Trucking 1 3% 0 0% 36 97% CHCH CBD % 0 0% 0 0% Kaiapoi CBD 0 0% % 0 0% Total 82 22% 42 11% % The results are presented by sampling category (i.e. the categories shows in Table 1) in order to highlight the differences between organisations within specific industry sectors and organisations selected based on their location. A majority of all organisations in the industry sectors, aside from hospitality, are not located in the Christchurch or Kaiapoi CBDs. Table 2 shows the breakdown of organisation type in the sampled CBDs. The CBD samples differ by their organisation composition. As mentioned above, given that much of the hospitality sector was in the Christchurch CBD, we excluded additional selection of hospitality organisations from the CHCH CBD sample. However, it is notable that 67 per cent of the CHCH CBD sample consists of retail trade, while the Kaiapoi CBD is highly service oriented. 15

16 Table 2: Organisation type breakdown of the CBD samples Organisation Type CHCH CBD Sample Kaiapoi CBD Sample Accommodation, cafes and restaurants 0% 10% Business services sector 0% 3% Construction 3% 3% Cultural and recreational services 0% 5% Education 0% 5% Finance and insurance 0% 3% FMCG 3% 3% Health and community services 3% 18% Manufacturing 6% 3% Personal and other services (e.g. hair 15% 13% salons) Property and business services 3% 18% Rental, Hiring and Real Estate Services 0% 3% Retail trade 67% 13% Transport and storage 0% 5% Despite the different organisational composition of the two CBDs, organisations in Christchurch and Kaiapoi CBDs experienced more similarity of impacts than any other sector. This suggests that location within the CBD has as much, if not more, influence on organisational impacts as organisation type. Similarly, as the hospitality sample had many organisations within the Christchurch CBD, the results from that sector are often very similar to the CBD samples, again suggesting that location is a critical factor in the level and type of earthquake impacts organisations experienced. Locating an organisation within the CBD offers the benefit of increased access to infrastructure, customers and other organisations, while increasing the exposure to damages from neighbouring structures and the likelihood to be located within a cordoned area. Workers and shoppers may also be put off by the perceived risk of multi-story building collapse in a future earthquake. There is a greater density of organisations within CBD areas which often have a higher proportion of older, historic buildings which are more vulnerable to earthquake damage [1]. All of these factors contribute to the differential effects felt by organisations within the CBDs affected by the 4 September earthquake. 4.2 Sectoral Results The following section presents the results, by sector, from the questionnaire distributed to organisations in Canterbury between November 2010 and February

17 4.2.1 Demographic data In total 869 organisations were contacted for the survey; 366 usable responses were returned, giving an overall response rate of 42 per cent. The industry sectors with the highest response rates, by percentage, were ICT and critical infrastructure while that with the lowest was rural farm. Figure 1 shows the response rates for all the sectors sampled Response rate (%) Figure 1: Survey response rate, by sector As seen in Figure 2, respondents were distributed throughout the Canterbury region. The figure also shows the level of shaking intensity that was likely experienced by each of the organisations. 17

18 Figure 2: Location of sampled organisations in relation to MMI intensities 2 [26]. 2 This map is derived from GeoNet felt reports. The isoseismal projection in the inset is derived from GeoNet. Map by Zachary Whitman, Department of Geology, University of Canterbury. 18

19 The average and median number of employees for the organisations surveyed are included in Table 3. The distribution of organisation size in this study is generally reflective of the size of organisations throughout Canterbury [31]. A large proportion (77%) of organisations sampled had fewer than 20 full-time employees, with a majority (51%) of the total sample employing fewer than five full-time staff. Organisations with greater than 100 full-time employees comprised ten per cent of the sample. A complete breakdown of sector attributes can be seen in Table 3. On average, organisations in the Kaiapoi CBD had fewer employees than the Christchurch CBD. Table 3: Basic organisational demographics Number of Employees Sector Full-time Part-time Temporary Years Operating Years Operating at Location Property Owner Mean Median Mean Median Mean Median Mean Median Mean Median % ICT % Hospitality % Trucking % Critical Infrastructure % FMCG % Buildings Suppliers % Rural nonfarm % Rural Farm % CHCH CBD % Kaiapoi CBD % Total % Overall organisations in the CBDs were more likely to have fewer employees and rent rather than own the premises from which they operate. Both of these factors have been shown in the literature to increase vulnerability to disasters. Organisations in the hospitality sector, many of which are located in the Christchurch CBD, were also more likely to rent than own their premises Physical impacts of the earthquake Early in the questionnaire organisations were asked whether or not they were affected by the earthquake. If they were unaffected they were directed to the end of the survey. Thus, all of the information about impacts is from organisations that felt they had been affected in some way by the earthquake. As seen in Table 4, 90 per cent of the organisations in the Christchurch and Kaiapoi CBDs were affected by the earthquake. Even more hospitality (94%) and critical infrastructure (92%) organisations were affected. 19

20 Table 4: Closed and affected organisations Closure - Affected Organisations Duration of closure (days) Sector % Affected N % Closed Mean Median ICT Hospitality Trucking Critical infrastructure FMCG Buildings Suppliers Rural non-farm Rural Farm CHCH CBD Kaiapoi CBD Total Of those affected organisations, 64 per cent in total closed for some period of time following the earthquake. However, closure results differ by sector. A majority of organisations in the Christchurch CBD (97%), Kaiapoi CBD (86%), and hospitality sector (93%) closed for some period of time. These organisations also tended to close for longer periods of time on average than other sectors. While organisations are closed they lose income, but closure may also negatively influence the perception customers have about access to the area. The fact that organisations in the CBDs and hospitality sector were more likely to close and remain closed for longer may have implications for how those organisations recover relative to other organisation types. Organisations were also asked to indicate what factors contributed to their closing; the results are presented in Table 5. Nearly a quarter of all responding organisations, regardless of sector, indicated that waiting for their building to be structurally assessed contributed to closing. The next most important factor for the sample as a whole was the need to clear damage to the interior. 20

21 Table 5: Reasons for closure Building waiting to be structurally assessed Building declared unsafe Clear damage to interior Building waiting to be repaired Clear damage to exterior Machinery loss or damage Stock loss or damage Office equip loss or damage Damage to immediate locality Could not obtain replacement supplies or materials Could not deliver supplies/services Employees unable to get to work Owner or mgr had family or other commitments Other reason ICT Hospitality 20% 0% 13% 4% 0% 2% 2% 2% 7% 0% 5% 11% 4% 5% 53% 16% 25% 16% 19% 3% 38% 3% 41% 3% 16% 19% 0% 22% Trucking 8% 0% 8% 3% 3% 0% 3% 0% 3% 3% 5% 3% 0% 5% Critical Infrastructure 13% 0% 17% 4% 4% 0% 8% 13% 8% 0% 8% 8% 0% 0% FMCG 24% 2% 48% 10% 10% 10% 48% 2% 5% 14% 26% 21% 0% 10% Buildings Suppliers 10% 0% 20% 7% 10% 7% 13% 3% 0% 7% 13% 7% 7% 3% Rural Non-farm 19% 2% 36% 2% 7% 12% 26% 12% 2% 10% 21% 2% 2% 7% Rural Farm 0% 0% 3% 0% 3% 3% 0% 3% 3% 0% 0% 3% 0% 3% CHCH CBD Kaiapoi CBD 61% 21% 15% 12% 9% 0% 12% 9% 48% 3% 30% 27% 0% 9% 35% 33% 18% 20% 13% 5% 15% 5% 38% 10% 13% 18% 3% 8% Total 24% 7% 21% 8% 7% 4% 17% 5% 15% 5% 14% 12% 2% 7% 21

22 Notably, Christchurch (48%) and Kaiapoi (38%) CBDs and hospitality (41%) were by far the most likely to indicate that they closed due to damage to the immediate locality. Critical infrastructure was the next highest sector, with only 8 per cent of organisations indicating this factor contributed to closing. Similarly, organisations in the Christchurch (21%) and Kaiapoi (33%) CBDs and hospitality (16%) were more likely to indicate that they had to close due to their building being declared unsafe. Several CBD organisations indicated in an additional comments section that buildings had been declared unsafe due to proximity to other unsafe buildings rather than direct damage to their building. Obviously, neighbourhood impacts played a major part in the necessity to close for a period of time following the earthquake for organisations in the CBDs. While business interruption caused by closure is a major impact following a disaster, there are several other factors that disrupt an organisation s ability to do business. Thus, organisations were also asked how disruptive were the following on your ability to do business? and provided with a list of potentially disruptive factors. The degree to which a factor was disruptive to an organisation was quantified using a 4-point Likert scale. The organisations were asked to rank earthquake-related disruption effects on a scale of not at all disruptive (assigned a score of 0) to very disruptive (assigned a score of 3). These scores were averaged across each sector, and then divided by the maximum score of 3 to calculate the severity of the disruption item for each sector. The results are presented in Table 6. The severity of disruption types differed greatly by sector and area. Organisations in the Kaiapoi CBD reported higher overall disruption across all items. The most disruptive item for Kaiapoi organisations proved to be damage to or the closure of nearby organisations. This was also the most disruptive item for organisations in the Christchurch CBD and the third most disruptive item for the hospitality sector. Organisations within the Kaiapoi and Christchurch CBDs, and hospitality sector also found the inability to access their site to be very disruptive on their ability to do business. These factors were cited as being more disruptive than structural damage to building. Interestingly, structural damage did not prove to be the most disruptive item for any sectors sampled, though certain sectors indicated receiving more structural damage than others, as can be seen in Table 6. Many organisations in the Christchurch and Kaiapoi CBDs and some of the organisations in the hospitality sector were located inside areas cordoned-off for several days and in some cases weeks following the 4 September earthquake. Organisations noted that even when they did not suffer any structural damages, they were forced to close due to their proximity to unsafe buildings or due to their location in areas that were officially cordoned-off. This was not a significant issue for the majority of organisations outside of the CBD. Urban organisations found that damage to or closure of nearby organisations was disruptive, and possibly as a result of this they did not find the relationships with their neighbours to be as helpful in mitigating the effects of the disaster. Conversely, farm and non-farm rural organisations were not as affected by the closure of or damage to nearby organisations and they found their relationships with neighbours to be very helpful in mitigating the effects of the earthquake. 22